Thanks Micro. I think what I'm asking is......should the setting on my ASIO Panel (256, for instance) match the I/O buffer settings in Preferences (e.g. 256)?
Yes, Sonar should use the settings in ASIO Panel.
If recording (say... guitar) while listening to previous tracks, make the buffer size as small as possible without dropouts etc, so there is minimal delay in the guitar track. I try to keep the roundtrip latency < 10ms. If the latency is > 15ms or 20ms, you will begin to hear the guitar track delayed. If your interface has direct monitoring, use this instead since you will hear the guitar before it goes into the DAW and eliminate at least the input latency.
For mixing, the latency is not important since there are no external instruments involved and all the tracks are already recorded (or generated from MIDI) so use a bigger buffer setting to allow more tracks/effects before dropouts. You will notice a delay from pressing PLAY to hearing audio but that is about it.
You can think of the I/O buffers as little delay lines on the in and out of the DAW.